If you are new to the property housing market and are looking to purchase a residential property and have never owned property in the past, you will be referred to as a ‘First-time buyer’.

Purchasing property as a first-time buyer can seem daunting as there are many things to factor in.

We’ve tried to put together some frequently asked questions and some insightful information to help you navigate around the property market.

What do I need to have when applying for a mortgage in the UK?

While there may be some lenders that ask for any additional information during the mortgage application process, some general things might include:

• Bank statements from your current bank, dating from the last 3 to six months.
• Proof of identity (such as a UK passport or driver’s license).
• P60 form from your current employer.
• 3 months or more payslips.
• Any utility bills that you have.
• A tax return form SA302 if you have multiple streams of income or are a self-employed individual. These can be found through the HMRC website.
• Self-employed individuals may also be required to provide further. information which supports what their SA302 states regarding their income (including bank statements and other legal documents).

How much money can I borrow?

This will depend on the lender and the borrower circumstances, many things are factored in impacting the total amount a lender will provide.

Every lender will look at the ‘affordability’ of a borrower. In simpler terms this is the personal information provided, income details, looking at things like your credit score and history, ability to manage reoccurring payments (looking at in-goings and out-goings) and bills to evaluate your borrower reliability.

If a borrower has a history proving they are able to make repayments on-time, and maintain a high credit score, they will more likely be provided with larger loan sizes.

However, this will still depend on the situation, what the borrower is looking to secure funding for, the lender and more.

Nowadays, it is much harder to secure mortgages as many high street lenders have stricter criteria making it more difficult to have applications approved.

Specialist lenders like West One may be more comfortable dealing with certain cases where high street lenders can’t and take a more flexible view on types of income accepted and affordability.

This is because West One offer a wide range of specialist products for residential, buy-to-let, second charge, bridging and development products suitable for borrowers who may be in unique circumstances such as having a blip in their credit history, facing affordability challenges with other lenders criteria, or those who are looking to remortgage onto a new product.

What does remortgaging mean?

Remortgaging is the process whereby a borrower’s existing mortgage deal is coming to the end of the term and the borrower is looking at moving onto another deal (this could be with their existing lender or with a new one).

The borrower will go onto a new deal which may be more suited to cater for their needs, for example, switching onto more suitable rates.

This is often done closer to the end of the existing deal that the borrower is in.

Below is a list of some relevant West One blogs and case studies revolving around remortgages and how West One have dealt with them in the past:

Blogs

https://www.westoneloans.co.uk/blog/remortgaging-and-product-transfers-set-to-boost-second-charge-lending

Case studies

https://www.westoneloans.co.uk/news/case-studies/hmo-remortgage-for-large-portfolio-landlord-with-over-100-properties

Why are mortgage applications declined?

Inconsistent / insufficient credit history – Your credit score may be too low, or your credit history shows that you are not reliable at making payments.

Too many credit applications – Credit reports are recorded when an individual applies for credit (most searches are recorded). If a borrower has applied for too much credit, especially in short periods of time it can look as if the borrower has difficulties staying on top of their finances.

Large amount of debt – It is very difficult to have a mortgage application accepted when you have a lot of debt to your name. Make sure that any outstanding loans are repaid or there is a suitable plan in place to repay.

Not enough income – It is common that a mortgage application is declined if a borrower is deemed to not be earning enough annual income. Most high street lenders will tend to only look into applicants who are earning at least £25k, however there are other factors that will affect this.

Low deposit – Typically, a borrower should provide a deposit 5-10% the value of the property which they wish to secure a mortgage on. It is important to save a larger sum of deposit when looking to apply for a mortgage.

How long do I have to repay my mortgage?

The length of a mortgage deal is referred to as a ‘term’ and the term will be agreed upon when establishing a new mortgage deal.

Most lenders offer terms of up to 25-30 years, although some may be longer or shorter depending on the type of deal that is secured with a lender.

Often, longer mortgage terms can lead to lower monthly payments, but this could also mean higher interest charges added to the original borrowed amount over time.

Shorter mortgage terms can be beneficial as well as it means that the loan is repaid sooner, which reduces the total amount of interest paid.

However, shorter terms often depend on the affordability associated with the borrower.

It is important to evaluate your current financial position, including income and any circumstances which could arise during the term of your mortgage.

What happens if I miss a mortgage payment?

Missing a mortgage payment may be detrimental when trying to borrow additional finance in the future.

If a borrower misses a payment, the lender will report the incident to credit reference agencies such as Experian or Equifax, which will result in a drop on their credit score.

When a borrower is behind on their payments, it is referred to as ‘Mortgage arears’. Mortgage arrears are a priority debt meaning they will need to be paid before other debts, like paying off a credit card.

As a mortgage is secured against the borrower’s property, lenders have legal rights to taking possession of the property in the case that a borrower is consistently unable to make mortgage payments or is no longer able to repay completely.